How the Longaberger basket empire slowly unraveled after 2000 peak

Founder Dave Longaberger started The Longaberger Company in 1973 with five weavers in a small Dresden building. The company built a seven-story basket-shaped headquarters and grew into a $1 billion manufacturer of handcrafted baskets by 2000, the year following the founder’s death. Beginning in 2001, sales began to decline. Layoffs, leadership changes and downsizing followed, culminating in bankruptcy and liquidation this year.
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The basket-maker, known for its seven-story replica building and fanatical collectors, is out of business. Some are bitter over the ending, while others focus on the good times.

The Longaberger basket empire, once a $1 billion company with more than 8,000 employees and 70,000 sales associates, slowly unraveled in the nearly two decades since its founder's death.

The end came 45 years after Dave Longaberger started the company with five weavers in a small Dresden, Ohio, building, and 20 years since the founder retired and turned the company over to his daughter, Tami.

First came the May announcement it was suspending operations. Then, in June, its parent company filed for Chapter 11 bankruptcy. And finally, on Oct. 26, a Texas bankruptcy court granted the conversion to Chapter 7, for liquidation of the company's assets.

Patty Marshall, a consultant for 26 years from Martinsville, Indiana, said this year has been a difficult one.

“It’s like a death in the family because they’ve been a big part of my life," Marshall said. "This hurts. I think it was poor management. The last few years, more money was being taken out of the company than being put back in."

But, for Marshall, and many others, the painful ending of the company cannot erase the many great memories.

“My experience with Longaberger has been wonderful," Marshall said. "I can’t imagine the last 26 years without Longaberger because I’d have a big void in my life. My circle of friends increased through the years."

The reason for the company's demise depends on whom you ask, and much of it goes back to several events from 1998 to 2001.

In 1998, the first full year occupying the basket-shaped headquarters in Newark, Dave Longaberger retired from running the day-to-day operations of the company. He died in 1999.

In 2000, Longaberger reached $1 billion in sales, its peak year, and ranked as one of the 500 largest privately held companies in the U.S.. Then came the terrorist attacks on Sept. 11, 2001, an economic recession and a changed marketplace.

The founder's legacy

The company brought joy, prosperity and big dreams to many around the country for many years. Dave Longaberger receives much of the credit. His supporters say he was impossible to replace.

Sara Clancy, 37, a Longaberger collector in Ohio, said her grandfather often talked about Dave Longaberger when he drove a tour bus for the company.

“It was his dream job," Clancy said. "He loved talking to people. He enjoyed it so much. He couldn’t say enough about Dave. Really good things to say, how kind he was and how he really cared about the employees. He definitely thought the world of Dave.”

Dixie Rollison, of Dresden, who worked in shipping for the Longaberger company for 29 years,said Dave Longaberger had a unique personality that endeared himself to his workers.

“Dave always came in and joked with us," Rollison said. "It was a fun place to work, but serious when we had to be. Dave was loved by everybody in this town. You’d think he was God. With his passing, it was a very hard time for everybody.

“Dave’s thing was when I make money, my people make money. We didn’t care. We loved the company.”

The daughters' role

Many blame the company's demise on the founder's daughters: Tami Longaberger, company CEO and president at the time of Dave Longaberger's death, and sister Rachel Longaberger Stukey, who was president of The Longaberger Foundation. Overspending and mismanagement are the usual allegations.

Rose Wolverton, a consultant from Hamburg, N.J., said, “(Tami) tried. She really did. I saw that poor lady age. You just know when the weight of the world is on somebody’s shoulders.”

Stukey, in an email response to Advocate questions, said her father's death was difficult for the company to fully overcome, even though it survived for 19 more years.

"The sudden and unexpected death of the founder, CEO and chairman of the board, set the business and its operations on a chaotic trajectory," Stukey wrote. "The iconic leader and THE driving force behind every aspect of the company was a healthy 61-year old man one day and was a terminally ill, stage 4 cancer patient the next."

During the ensuing 18 months of surgeries, chemotherapy and experimental treatment, there was no course set for what to do if he died, Stukey said.

"There was NO preparation for this event," she said. "We all thought we had decades to deal with the notion of him being gone. There was no previous succession plan or even a transition phase for the business."

Several consultants have said pottery became an issue with their customers, for various reasons.

Rollison said, “I think we got too big too fast, especially when we started selling pottery, and couldn’t fill the orders because demand was so high.”

The decision to have pottery made in China was not popular, Rollison said. “I lost some customers because of that, because Longaberger had always been ‘Made in the USA.,'" Marshall said.

In 2009, Longaberger announced it would begin selling a new pottery line made in the United States, as a response to requests from consultants and customers, but would also continue to sell its pottery line made in Asia.

Wolverton said, “When they tried to have the pottery made in the U.S., the pottery didn’t meet expectations in quality control. I know people were upset with it (made in China), but it’s the way of the world.”

The photo that inspired the revamped Dave Longaberger memorial in downtown Dresden show Longaberger in his favorite thinking spot on the railroad tracks near early Longaberger facilities in Dresden. Longaberger

With Longaberger moving back to its community roots in Dresden, the Dave Longaberger memorial once at the homestead has been relocated to a small park at the corner of Main and Sixth Streets in Dresden. The memorial has been revisited to represent one of Dave Longaberger's favorite thinking spots, the railroad tracks that once ran near early Longaberger facilities. Chris Crook/Times Recorder

With Longaberger moving back to its community roots in Dresden, the Dave Longaberger memorial once at the homestead has been relocated to a small park at the corner of Main and Sixth Streets in Dresden. The memorial has been revisited to represent one of Dave Longaberger's favorite thinking spots, the railroad tracks that once ran near early Longaberger facilities. Chris Crook/Times Recorder

A 2013 Times Recorder file photo of the Dave Longaberger Statue it its original context at the Longaberger Homestead in Frazeysburg.
"A statue of Dave Longaberger is sits on the grounds of the homestead. Longabergerís Great American Picnic Celebration continued on Saturday at Longaberger Homestead." Times Recorder file photo

Founder and CEO Dave Longaberger signs a handful of employee holiday baskets for telephone technician Pamela Lutrell, who gathered up baskets from fellow employees to have Dave sign all at once. The Longaberger Company was celebrating the move into their new basket-shaped national headquarters on Wednesday, Dec. 17, 1997. Advocate File Photo

Tami Longaberger president and chief executive of The Longaberger Company stands outside the basket-shaped corporate office building in Newark Ohio Tuesday Feb. 2 1999. The company which her father started in 1973 with five basket weavers employed thousands of workers and produced millions of hand woven baskets a year. (AP Photo/File Chris Kasson) Associated Press

Tami Longaberger worked closely with her father, Dave Longaberger (in portrait behind), on the book "Longaberger: An American Success Story." The 2003 book focuses on the enduring history of the company with advice to entrepreneurs on the keys to a successful business. File

Longaberger President Michael Somoroff talks about the future of the company at the Longaberger Homestead in Frazeysburg in 2014. Somoroff moved from the world of television and advertising to take over the venerable basket maker. He left less than a year later. Gannett Ohio File photo

John Rochon, Jr., Longaberger President, Chariman and CEO, speaks to a crowd of more than 500 people about the future of the company during the Longaberger Bee at Tri-Valley High School in Dresden in 2016. Shane Flanigan/Times Recorder

Southeast Ohio Auctions auctioned items from the Longaberger Homestead in the company's former Building B in April 2018. Items ranged from decorative trinkets to furnature, and more than 400 people signed up to bid. Chris Crook/Times Recorder

Auctioneer Randy Newsom gets the action started as Southeast Ohio Auctions auctioned items from the Longaberger Homestead in the company's former Building B in April 2018. Items ranged from decorative trinkets to furnature, and more than 400 people signed up to bid. Chris Crook/Times Recorder

Southeast Ohio Auctions auctioned items from the Longaberger Homestead in the company's former Building B in April 2018. Items ranged from decorative trinkets to furnature, and more than 400 people signed up to bid. Chris Crook/Times Recorder

The Longaberger basket building, former company headquarters on East Main Street in Newark. It sold on Dec. 29, 2017 for $1.2 million to Steve Coon, a Canton-based developer. Sara C. Tobias/The Advocate, Sara C. Tobias/The Advocate

Many of those who do not blame company management for the company's collapse argue that the marketplace changed, and the popularity of baskets declined.

The 9/11 terrorist attacks hurt the economy, and then the Great Recession changed spending habits.

“The economy played a big part of it," Marshall said. "When the economy tanked for a period of time, people would rather spend money on food, shoes and clothes, things they really needed, than baskets.”

Clancy said she owns about 100 baskets, which is unusual for someone in their 30s. But, her love of baskets can be attributed to her grandfather driving Dave Longaberger around on a tour bus.

“It’s big to me because it has sentimental value," Clancy said. "Not a lot of friends my age have baskets, and don’t go out and buy baskets. Younger people are not as into baskets."

But, Wolverton said she created a market for farm baskets. The company just diversified too much, she said.

"My goal was to market baskets, because when I joined the business, it was a basket company. I could sell them now if I could find somebody to make them."

Dave Longaberger's goal, however, was to diversify the company to the point it was making everything for the home, and then build the homes, as well.

The parent company

Tami Longaberger sold the company in March 2013, to CVSL, which later became JRJR Networks, run by John Rochon Sr. and his son. Longaberger was the first of several direct-selling companies JRJR acquired in an effort to boost all the companies by pooling and sharing resources.

But, employees and consultants describe the last few years as the most chaotic in the company's history.

Matthew Clark, who started as a temp and became a senior accountant in less than three years, was laid off the day Longaberger left the Basket Building in Newark on July 15, 2016. When he started, a year after the sale of the company, there were about 300 to 400 still working in the iconic building.

But there was a big layoff in the summer of 2014, and another one in the spring of 2015, he said.

“They had lost so many people, the accounting department was basically not functioning," Clark said. "They had nobody to write a check to consultants. They had issues. A lot of long-time people wanted to stick around, but you could tell they just didn’t want to work for the Rochons.”

Clark said he thinks Tami Longaberger regretted selling the company and could do little to stop the collapse.

“I got to know Tami toward the end," Clark said. "It seemed like she had very little input, if any, in any of the operation. It was pretty much managed from Texas. It was just chaos.”

There was way too much inventory, no communication between departments, and a Texas company trying to merge the financial statements from multiple direct-selling companies into one public presentation, because company stock was sold on the New York Stock Exchange.

"It was spring 2015, when the wheels really started to come off," Clark said. "The company was not meant to scale down."

Marshall estimates she lost $6,000 to $7,000, but doubts she will ever be compensated.

"Pottery has been back-ordered for two years. The company said it was more important to pay electric bills instead of the pottery."

But if Wolverton is right and the market for baskets still exists, is there any chance of a Longaberger Company resurrection?

"Dad raised me to live on optimism," Stukey said. "Nothing is forever. I hope and pray that somebody with a heart for the business and the fortitude to rebuild can resurrect the company and operate it based on its original principles – the principles that made it successful for many decades and benefited many people."

Contact Kent Mallet at kmallett@newarkadvocate.com or follow on twitter @kmallett1958